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    Btg pactual conference presentation Btg pactual conference presentation Presentation Transcript

    • BTG Pactual XIII CEO ConferenceFebruary – 2012
    • AgendaOverview– Magazine Luiza2011 Main Events2012 Expectations 2
    • Overview – Magazine LuizaMarket Leadership One of Brazil’s largest durable goods retail chains with more than 728 stores nation-wide − Gross revenues of R$5.3 billion and EBITDA of R$248 million in 9M11 − More than 20 thousand employees serving 23 million customersStrong corporate culture and focus on people and innovationUnique multi-channel model under a single brand Physical stores, virtual stores, e-commerce website and telephone salesFocus on Brazil’s fastest growing socioeconomic segment The “C” (emerging middle class) represents 53% of Brazil’s population or more than 102 million peopleHistory of successful organic growth and acquisitions 8 acquisitions in the last 10 years and recent entry in the high growth northeast market July 2011, conclusion of the acquisition of 121 stores of Baú da FelicidadePioneer in Financial Services for retail First retail chain to establish JVs with financial institutions focusing on consumer creditFinancial discipline focused on results 3
    • Overview – Magazine Luiza Proven History of Strong Organic Growth and Successful Acquisitions 728 * 604 +121 stores 455 444 Northeast: Madol, Killar +136 stores 391 351 346 253 5.3 + 42% 5.0 São Paulo (Capital): Lojas Líder +46 stores 174 Rede Wanel Santa Catarina: 3.8 127 +100 stores 3.2 3.5 111 96 Rio Grande do Sul: 2.6 (9M10) +51 stores 2.2 Campinas: 1.9 Upstate São Paulo: +20 stores 1.4 +5 stores 0.9 0.6 0.7 0.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 9M11 Gross Revenues from Retail Operations (R$ billion) Total Stores* Total of stores in december, 2011. 4
    • Overview – Magazine LuizaGeographic footprint covering Brazil’s main regions % of Stores per regions (75% of GDP) 728 stores Northeast 20% South Cabedelo 30% Central West Simões Filho 2% Contagem Ribeirão Preto Ibiporã Loureira Navegantes Southeast Caxias 50%States with storesDistribution centers (8 + 1 cross docking) 5
    • Unique Business ModelDifferentiated positioning to capitalize on industry growth 1 Strong corporate culture, focused on valuing people 2 Integrated sales platform with multiple sales channels Large customer base, with relationship management 3 targeting customer loyalty and retention Broad, competitive portfolio of services and financial 4 products 6
    • Focus on Innovation: Magazine Você Personalized virtual store using Social Network to sell any of Magazine Luiza’s products Permits users to receive reviews from contacts they trust More than 25.000 virtual stores opened after 3 weeks of the releaseToday’s Once Consumer search for decided, purchase product’s information and takes place.. reviewsNow with Magazine Você Consumer search for Purchases straight from product’s information and those contacts and reviews connections 7
    • Corporate Structure 100% 40.55% 50% 100% 100% 1 2 9.45% (To be incorporated (Incorporated in in 2012) 2011)(1) JV with Itaú Unibanco(2) JV with Cardif 8
    • Ownership Structure Pre- IPO Post- IPO Free Float 29.7% LTDCapital Intl. Inc. Administração e (Private Equity Capital Intl. Inc. Part. S.A. Fund) (Private Equity LTD 75.4% Fund) 12.4% Administração e 2.5% Part. S.A. Founding Family Founding Family 60.6% Members Members 6.7% 2.7% Wagner Garcia Wagner Garcia Part. S.A. Part. S.A. 5.6% 4.5% 150,000,000 shares 186,494,467 shares 9
    • AgendaOverview – Magazine Luiza2011 Main Events2012 Expectations 10
    • 2011 Main Events 1Q11 2Q11 3Q11 4Q11 Consolidation of Sao Paulo Office IPO Process (Kick-off in Feb. and conclusion in Jun.) Continuing the organic growthOpened 24 new stores and refurbished 50 stores Investments – TI and Logistics Investments to ensure the success of the integrations Integration Process – Lojas Maia Initiated the process of refurbishment and brand name transition Acquisition and Integration Lojas do Baú Initiated process of refurbishment, corporate and systemic integration 11
    • 2011 Main Events 1Q11 2Q11 3Q11 4Q11 Consolidation of the Office of Sao Paulo IPO Process (Kick-off in Feb. and conclusion in Jun.) Continuing the organic growthOpened 24 new stores and refurbished 50 stores Investments – TI and Logistics Investments to ensure the success of the integrations Integration Process – Lojas Maia Initiated the process of refurbishment and brand name transition Acquisition and Integration Lojas do Baú Initiated process of refurbishment, corporate and systemic integration 12
    • IPO Company listed on Novo Mercado Net amount of R$550 million Funds from the Offering (% of primary offering ) • Opening of new stores: • Increase Working Lojas do Baú: 100 stores Capital (Maia e Baú) Work Capital / Magazine Luiza: 18 stores Decrease on debt Opening Stores/ Acquisition Lojas Maia: 6 stores 30% • Reduction of 30% product lines Total: 124 stores• New distribution center in • Magazine Luiza: 50 stores Guarulhos • Lojas Maia: 39 stores Technology and Stores refurbishment• Expansion of Louveira’s Logistics 20% • Baú: 35 stores 20% distribution center • Total: 124 stores• Pilot project: own fleet (SP) 13
    • 2011 Main Events 1Q11 2Q11 3Q11 4Q11 Consolidation of Sao Paulo Office IPO Process (Kick-off in Feb. and conclusion in Jun.) Continuing the organic growthOpened 24 new stores and refurbished 50 stores Investments – TI and Logistics Investments to ensure the success of the integrations Integration Process – Lojas Maia Initiated the process of refurbishment and brand name transition Acquisition and Integration Lojas do Baú Initiated process of refurbishment, corporate and systemic integration 14
    • Integration Process – Lojas Maia 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12Integration Process of Lojas MaiaBrand name transition Metropolitan Region of Recife 14 stores (Out.) Metropolitan Region of Maceió 9 stores (Dec.) Metropolitan Region of Fortaleza 15 stores (Dec.) Metropolitan Region of Salvador 15 stores Metropolitan Region of João Pessoa 15 storesCorporation IntegrationSystemic Integration of storesBenefits (synergies) from integration 15
    • 2011 Main Events 1Q11 2Q11 3Q11 4Q11 Consolidation of Sao Paulo Office IPO Process (Kick-off in Feb. and conclusion in Jun.) Continuing the organic growthOpened 24 new stores and refurbished 50 stores Investments – TI and Logistics Investments to ensure the success of the integrations Integration Process – Lojas Maia Initiated the process of refurbishment and the brand name transition Acquisition and Integration Lojas do Baú Initiated process of refurbishment, corporate and systemic integration. 16
    • Integration Process – Lojas do Baú 3Q11 4Q11 1Q12 2Q12Integration process of Lojas do Baú (7 months)Acquisition of 121* stores of Baú July 29, 2011 - R$80,3 millionsDocumentation for starting operations Most of the stores closed during the periodVirtual Stores Opening of the Virtual Stores 35 stores (Paraná) Refurbishment of stores Complete refurbishment of stores Systemic Integration End of DecemberConventional Stores Opening of the Conventional Stores 69 stores (34 Paraná, 34 São Paulo, 1 Minas Gerais) Refurbishment of stores Change in storefront and uniform Systemic Integration End of FebruaryBenefits (synergies) from integration* 13 stores were sold and four conventional stores were refurbished and attached to the already existing Magazine Luiza´s stores 17
    • AgendaOverview – Magazine Luiza2011 Main Events2012 Expectations 18
    • 2012 Expectations1 3 Sales Growth Essential Projects Growth trend mainly in the 2nd half of 2012 (inverse Continue projects focused on: performance 2011 X 2010) Satisfaction of customers and employees Effect of minimum salary Sales Performance Decrease in interest rates (SELIC) Commercial and operational management Stability of employment rate Inflation under control Maturation of new stores and acquired stores2 4 Selling & Administrative Expenses Investments Conclusion of the integration process (Lojas Maia e Baú) Investments Reduction Dilution of administrative expenses of São Paulo Office ML 10 to 15 new stores Focus on rationalizing costs and expenses: Maia 10 to 15 new stores Store operations, marketing, logistics and consulting Total 20 to 30 new stores Stability of delinquency rates and maintenance of conservative provisions in Luizacred Finish the expansion of Louveira distribution center (from 60 to 95 square meters) 19
    • Investor Relations ri@magazineluiza.com.br www.magazineluiza.com.br/riLegal DisclaimerAny statement made in this presentation referring to the Company’s business outlook, projections and financial and operating goals representbeliefs, expectations about the future of the business, as well as assumptions of Magazine Luiza’s management and are solely based oninformation currently available to the Company. Future considerations are not a guarantee of performance. These involve risks, uncertainties andassumptions since they refer to forward-looking events and, therefore depend on circumstances that may not occur. These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects, market conditions, and performance of theBrazilian economy, the sector and international markets and hence are subject to change without prior notice. Thus, it is important to understandthat such changes in conditions, as well as other operating factors may affect the Company’s future results and lead to outcomes that may bematerially different from those expressed in such future considerations. This presentation also includes accounting data and non-accounting datasuch as operating, pro forma financial data and projections based on the Management’s expectations. Non-accounting data has not beenreviewed by the Company’s independent auditors. 20
    • AppendixFinancial Information – 3Q11/9M11 21
    • Highlights for the Period (3Q11)Sales growth above market average (+34%)Same Store Sales growth (+20%)Internet expansion (+48%) and Innovation (“Magazine You”)Lojas Maia impressive performance (+58%)Effective brand name transition in Recife regionFastest administrative integration of Baú storesSuccess in the opening of Parana’s virtual storesOrganic expansion: 11 stores till Sep/11 + 13 stores till Dec/11Luizacred’s credit card base expanded to 4,2 millionDecrease in overdue portfolioAdjusted EBITDA margin of 5.7% 22
    • Gross Revenue (R$ billion) Retail Total + 40.5% + 41.7% 5.33 4.99 3.80 3.52 + 33.8% + 33.6% 1.89 1.77 1.70 1.74 1.59 1.64 1.411.03 1.18 1.32 1.12 1.261Q10 2Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11 1Q10 2Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11 23
    • SSS- Same Stores Sales (%) 31.2% 30.0% 26.3% 26.8% 20.0% 19.8% 16.6% 16.3% 3Q10 3Q11 9M10 9M11 Same Physical Stores Sales Growth Same Stores Sales Growth 24
    • Internet (R$ million) + 48.2% 570 385 + 48.0% 214 174 182 145 130 110 1Q10 2Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11 25
    • Lojas Maia – Gross Revenue (R$ million) + 72.5% 734 + 58.2% 426 253 244 237 145 154 127 1Q10 2Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11Note: 2010 pro-forma figures, since Lojas Maia was acquired in Aug/10 26
    • Net Revenue and Gross Income (R$ million) Consolidated Net Revenue Consolidated Gross Income + 31.7% + 39.9% 1, 476 4,491 1,121 + 33.8% 3,211 + 26.8% 1,603 470 483 524 1,416 1,473 4131,073 1,197 3682Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11 2Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11 27
    • Operating Expenses (% NR) +10bps -100bps 20.9% 19.9% 20.0% 19.9% +30bps +60bps 5.2% 5.5% 4.6% 5.2% 3Q10 3Q11 9M10 9M11 Selling G&A 28
    • Consolidated EBITDA (R$ million) + 10.2% 248 225 - 2.0% 94 92 3Q10 3Q11 9M10 9M11EBITDA 7.9% 5.8% 7.0 5.5%Margin 29
    • Adjusted EBITDA (R$ million)(=) EBITDA (reported) R$ 92.2 mm(+) Pre-operation expenses at Baú stores R$ 14.1 mm(+) Luizacred revenue recognition R$ 11.7 mm(+) Sales at Lojas Maia R$ 4.0 mm(+) Pre-operational expenses at new stores R$ 2.2 mm(+) Consulting expenses at Magazine Luiza R$ 5.8 mm(+) Pre-operational expenses at Consortium business R$ 1.6 mm(-) Lojas Maia fiscal provision benefits R$ 32.6 mm(-) Luizacred revenue from marketing selling structure R$ 21.4 mm(+) Other expenses related to the network integration R$ 13.9 mm(=) EBITDA (adjusted) R$ 91.5 mm 30
    • Financial Expenses (% NR) -90 bps -10 bps 3.2% 2.9% 2.8% 2.3% 3Q10 3Q11 9M10 9M11 31
    • Consolidated Net Income (R$ million) Adjusted Net Income*: R$18 millions / R$ 35 millions (*) Adjusted by Income Tax and Social Contribution not accounted at Lojas Maia and Baú 48 29 23 12 3Q10 3Q11 9M10 9M11Net Margin 1.9% 0.7% 1.5% 0.6% 32
    • Financed Mix Sale (% total sales) 23% 23% 25% 31% 36% 29% 29% 30% 38% 37% 12% 13% 11% 2% 0% 35% 35% 29% 34% 27%Total 3Q10 ML 3Q11 Maia 3Q11 Baú 3Q11 Total 3Q11 Luiza Card CDC Third Party Cards Cash Sales/ Down Payment 33
    • Cartão Luiza – Total Credit Card Base(‘000) + 58.0% 3,975 4,174 2,642 2,271 2Q10 3Q10 2Q11 3Q11 34
    • Portfolio Luizacred (R$ million)PORTFOLIO (R$ million) Sep-11 Jun-11 Mar-11 Dec/10 Sep-10Total Portfolio 3,011.7 100.0% 2,668.3 100.0% 2,424.2 100.0% 2,359.7 100.0% 1,994.9 100.0%000 to 014 days A 2,309.5 76.7% 2,020.5 75.7% 1,771.8 73.1% 1,825.4 77.4% 1,554.3 77.9%015 to 030 days B 80.5 2.7% 119.6 4.5% 128.1 5.3% 130.8 5.5% 88.2 4.4%031 to 060 days C 71.6 2.4% 75.4 2.8% 76.6 3.2% 87.2 3.7% 51.2 2.6%061 to 090 days D 73.8 2.4% 65.3 2.4% 72.4 3.0% 44.5 1.9% 38.9 2.0%091 to 120 days E 67.8 2.3% 55.3 2.1% 83.2 3.4% 36.9 1.6% 35.3 1.8%121 to 150 days F 53.6 1.8% 51.8 1.9% 63.3 2.6% 31.8 1.3% 32.2 1.6%151 to 180 days G 53.6 1.8% 64.6 2.4% 44.8 1.8% 29.3 1.2% 30.8 1.5%180 to 360 days H 301.3 10.0% 215.9 8.1% 184.0 7.6% 173.7 7.4% 163.9 8.2%Overdue up to 90 days 225.9 7.5% 260.2 9.8% 277.1 11.4% 262.6 11.1% 178.3 8.9%Overdue above 90 days 476.3 15.8% 387.6 14.5% 375.3 15.5% 271.7 11.5% 262.3 13.1%Total Overdue 702.2 23.3% 647.8 24.3% 652.4 26.9% 534.3 22.6% 440.6 22.1% -100 bps 35